SP Trading's mysterious Hutt River links

Take one former Soviet Air Force transport plane, stuff with smuggled weapons, add a man from Cleethorpes, mix in a dash of Pacific island spice, simmer gently on a Bangkok runway, and finally add as topping a tall tale of the country that does not exist but still manages to issue passports, banking licences and other everyday essentials.

It could be a remake of The Mouse That Roared, the Peter Sellers movie about the tiny country everyone ignored until it declared war on the USA. It could be, but it isn't. It is all true, and quite serious.

On December 11, an Ilyushin-76 aircraft took off from Pyongyang in North Korea. It carried 147 sealed crates, weighing in all about 35 tons.

Later that day the aircraft landed at Bangkok to refuel. And before it could leave on December 12, Thai police surrounded the plane, searched it, and broke open the crates.

They were acting on a tip-off from an un-named intelligence agency ' probably the CIA, given the close relationship that has existed between Thai and American security services, dating back to the Vietnam War.

According to the air waybill seen by Financial Mail, the Ilyushin was carrying drills, pipeline equipment, and other spare parts for the oil industry.

What Thai police found was rather different: weapons, ammunition, explosives, and surface-to-air missiles, all heading for Tehran, in contravention of the United Nations ban on arms exports from North Korea.

The aircraft's crew, who are from Kazakhstan and Belarus, have denied all knowledge of the weapons. Enquiries since then have concentrated on a complex paper trail of shadowy companies.

The Ilyushin is registered to an operator called Air West in the former Soviet republic of Georgia. It leased the aircraft to a New Zealand company called SP Trading, which says it was paid to make the flight by a Hong Kong company called Union Top Management, owned by a man giving an address in Barcelona.

SP Trading was set up last July and has one director, named Ms Lu Zhang, a 27-year-old Chinese national. But the business is owned by yet another company, VicAm (Auckland) Limited.

Investigators believe Iran used SP Trading as a go-between to avoid paying North Korea directly, in breach of the UN arms embargo.

And VicAm has attracted attention before, when a whistleblower based at the London offices of America's Wachovia Bank reported in 2008 that VicAm subsidiaries were involved in suspicious international money transfers.

The paperwork to register SP Trading as a company, with Lu Zhang as director, was carried out by GT Group, an international business with offices on the tiny tax haven island of Vanuatu in the Pacific.

GT Group was set up by Geoffrey Taylor, 66, who originally comes from Cleethorpes in Lincolnshire and has spent many years marketing tax avoidance and 'privacy' schemes, many of them involving companies whose true ownership and control are shrouded in secrecy. And this brings us to the non-existent country.

For Taylor, who moved to New Zealand but is now thought to live on Vanuatu, is also Professor Sir Geoffrey Taylor, B.Com, MBA, PhD, F.Inst.D, FAIBF, President of the Southern Pacific University and High Representative to Vanuatu of the Principality of Hutt River ' the country that never was.

Hutt River lies in Western Australia, and the principality is actually a huge farm that matches Hong Kong in its size. In 1969, farmer Len Casley fell out with the Australian government in a dispute over wheat quotas, and in 1970 he declared independence.

Casley became Prince Len, and his wife Princess Shirley. Their son and heir, Prince Ian, is also Prime Minister. Another son, Prince Wayne, is Foreign Minister.

They sell passports, ID cards, driving licences and titles. You can become a dame or a knight, like Geoffrey Taylor, or for a price you can purchase a dukedom. You can even become Hutt River's ambassador.

The principality is not recognised by any country on the planet, and Australia has always treated Prince Len as a joke. Australians visit Hutt River so they can say they have been 'abroad'. They buy Hutt River postage stamps and change their genuine cash into Hutt River banknotes or coins.

But there is a darker side to Prince Len's private world. There are more than 13,000 Hutt River passports in circulation around the world. Some will certainly have been used as ID to set up companies and open bank accounts.

Then there are the universities said to be accredited by the principality. There was Delphi University, which asked would-be students to hand over their fees via PayPal.

There is Pebble Hills University, which says: 'The University is fully licensed and permitted, to provide Educational programs, seminars, electronic learning and similar, leading to the granting of academic and professional degrees, by Hutt River Province'.

And there is Southern Pacific University, which offers an internet-based 'virtual campus' and whose faculty has elected Geoffrey Taylor to the position of professor, according to his CV.

On the diplomatic front, in 2008 an Iranian appeared in court in Dubai, charged with fraudulently issuing false passports and involvement in a land scam. He pleaded unsuccessfully that the court could not hold him as he was Hutt River's new ambassador to the Gulf state and had diplomatic immunity.

In the USA, the Federal Trade Commission won a court ban against a coin dealer who sold Hutt River money to collectors as legitimate cash. And in a separate case, a mortgage fraud gang was convicted and the ringleader jailed for 50 years, after the court heard that they posed as lawyers, brokers, diplomats and even doctors ' all on the basis of titles they said in evidence had been conferred by Prince Len.

There are even signs of disquiet at Hutt River itself. Last February, the principality issued an international warning that Universal Gold Bank was making false and misleading claims. The company was registered at Hutt River's own version of Companies House, and held a Hutt River banking licence.

And so back to Geoffrey Taylor and the aircraft full of arms. Taylor appears to be semi-retired, having handed control of GT Group to his sons. But records in New Zealand show that he was still behind VicAm several months ago, when its SP Trading offshoot was formed.

The big question is this: who paid GT Group to form SP Trading and use VicAm and Lu Zhang to conceal the identities of the real owners? And the answer lies in Britain.

In a statement issued from its offices on Vanuatu, GT Group said: 'SP Trading Limited was incorporated by our New Zealand agent, the 22nd day of July 2009, at the request of one of our professional clients based in the United Kingdom. The professional client met the due diligence requirements in place with regard to identification of the beneficial owner.'

Geoffrey Taylor's son Ian added that he had contacted the un-named British client behind SP Trading, and had received a statement from the client. In a stilted form of words that suggests English may not be the writer's first language, that statement insists that SP Trading believed it was carrying oilfield equipment.

It explains: 'Crew has no right to open cargo package and check content. Air Charter Contract states that Air West Ltd takes no responsibility for non-coincidence of the cargo to be carried with the documents provided on board.

'Being aware of the aforementioned, by deception and forgery, a Hong Kong shifted responsibility on to SP Trading Ltd, Air West Ltd and crew of the aircraft.'

One line of enquiry for police and intelligence services is certain to be Lu Zhang's directorship of two British companies, both based in Harley Street, in central London.

Ms Zhang, 27, is the sole director of Spreighton Investments UK, said to be a computer company, and Euro Media International, an advertising and website hosting company.

The Harley Street address belongs to Formations House, a company formation agency that offers nominee directors and shareholders to conceal its clients' real identities.

At Formations House, a woman who gave her name as Denise said her firm used limited companies as nominees. As a real person, Lu Zhang is the genuine head of the two Harley Street companies, she explained. And she denied any role in setting up SP Trading.

Mysteriously though, Financial Mail was then contacted from Bucharest in Romania by tax consultant Mariana Iordachescu, who claimed to speak for the true owners of both Harley Street companies.

She insisted: 'Lu Zhang is just a nominee director and not the beneficial owner. There is no connection between Spreighton Investments, Euro Media International, and the company with trouble (SP Trading).'

Enquiries are continuing in an attempt to track down those ultimately responsible for the Ilyushin's cargo. But whatever the outcome, Prince Len may be regretting his choice of High Representative to Vanuatu.

For although a dealer in secrecy, Geoffrey Taylor has ended up turning the spotlight well and truly on himself and on Hutt River, a fantasy state whose fantasy paperwork can have unfortunate consequences.

INSIDE MIDAS EXTRA

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Simon Watkins Financial Editor, Mail on Sunday